Federal Information and News Dispatch, Inc.
State Department
July 20, 2004
Millennium Challenge Corporation Board of Directors Meeting Open
Session
TEXT: Secretary Colin L. Powell
Harry S Truman Building Room 1107
July 20, 2004
(10:00 a.m. EDT)
SECRETARY POWELL:Good morning, everyone. It’s my great pleasure to
call the meeting to order and to welcome all of you to this regular
meeting of the Board of Directors of the Millennium Challenge
Corporation. I see that we have a quorum of directors present so we
can begin our business.
Let me begin by welcoming our two newest members, and the first two
outside members of the Millennium Challenge Corporation Board,
Christine Todd Whitman and Kenneth Hackett. Both of them were
nominated by the President in June and confirmed by the Senate just
last week and sworn in by me seven and a half minutes ago.
(Laughter.) So we are very pleased to have them both here. And as
most of you know, Christie Whitman previously served as Administrator
of the Environmental Protection Agency and as Governor of the State
of New Jersey. Ken Hackett currently serves as President of Catholic
Relief Services, where he oversees important relief and development
operations around the world. And we are very fortunate to have two
such respected and gifted individuals on the board and we certainly
look forward to their contributions.
And so, on behalf of President Bush and all of the members of the
Millennium Challenge Corporation team, I’d like to welcome them both
to the Board of Directors.
Before we get started on Board business, I wanted to note that due to
the limited time available for a public session today and to give
interested members of the public an opportunity to ask some questions
of the Millennium Challenge Corporation management, MCC will be
holding a public outreach session at GSA on Tuesday, July 27th, next
week, at 10:30 a.m.
At that session members of the MCC management team would like to
update you on their trips to the 16 MCA-eligible countries and other
recent developments and then take your questions. I understand, by
the way, that the country trips were very positive and productive.
The reports that I have received back from Paul and our embassies
certainly give me reason for optimism, so I would encourage you to
attend the outreach session next week.
Let’s now move along to the first item of business, the approval of
the minutes of the Open Session of the May 6th Board Meeting. All of
us have had a chance to review the minutes of the Open Session of the
May 6th Board Meeting, which are included in your Board books. At Tab
1 is a resolution to approve these minutes and certify that they
accurately reflect the proceedings at that portion of the meeting.
If there are no questions or comments, do I have a motion to adopt
the resolution at Tab 1?
A PARTICIPANT: So moved.
SECRETARY POWELL: A second, please?
A PARTICIPANT: Second.
SECRETARY POWELL: All in favor?
(Chorus of ayes.)
SECRETARY POWELL: The resolution is adopted. We will now move on to
the next item of business, a report on MCC operations by Chief
Executive Officer Paul Applegarth. Paul.
MR. APPLEGARTH: Thank you, Mr. Chairman. Good afternoon. I’m pleased
to provide the Board an update on the work of the Corporation since
our last Board meeting. Because of limited time today, my report will
be a summary, with the idea that we will report in greater detail and
answer questions at next week’s public Board meeting.
For those of you who didn’t write down all the details of where the
meeting will be, they will be available on the MCC website shortly.
Also I want to, despite the best of planning efforts over a couple
months to keep calendars free, both Secretary Snow and Administrator
Natsios had to be out of town today unavoidably. Accordingly, I want
to recognize, in addition to our two new board members, Deputy
Secretary of the Treasury Bodman and Deputy Administrator of AID Fred
Schieck, who are here today.
At its basic Board meeting, the Board did two significant things. One
was to select the first 16 countries as eligible for MCC assistance
and to improve the establishment of a threshold program. Implementing
programs and policies related to those decisions has been the focus
of much of MCC’s operational activities for the last two and a half
months.
Immediately after the Board meeting, eligible countries were informed
of their status by each U.S. Ambassador to each — in their country
and we had a meeting for the ambassadors of the selected countries.
In addition, President Bush held a ceremony in the East Room of the
White House to recognize and congratulate the representatives of the
MCC-eligible countries. This event was attended by members of the
Board, Congress, senior White House officials and a number of NGOs
and members of the public who have been instrumental in helping to
create the MCA.
Following an intense period of preparation, MCC then sent five teams
to visit all the 16 countries at the end of May and early June,
departing within ten days of the last Board meeting. There were five
purposes for these trips: first was to congratulate the countries for
being selected; two, to invite the submission of a proposal; three,
review the three core tests that MCC will use in evaluating
proposals, i.e., will the countries’ proposed program lead to poverty
reduction, to sustained economic growth, were the countries’
priorities determined through a consultative process, and what
additional policy commitments will the selected countries make to
continue the policy reform process; the fourth purpose of the trips
was to communicate MCC’s message broadly in the country through
meetings with government officials, members of parliament, political
leaders, NGOs, the private sector, other donors and civil society
leaders; and finally, to conduct an aggressive grassroots
communication and public diplomacy strategy, including press
conferences and radio and TV interviews to alert the people in
selected countries of the country’s selection as an MCC country,
highlight the United States involvement and encourage them to
participate in the consultative process to develop their country’s
priorities.
Before going, we also spent a lot of time with our U.S. key partners
at USAID, State and Treasury, and I want to thank the Board members
for the administration for making their staffs available to assist
with our trips. They did provide an enormous amount of assistance
that was critical to our preparation, as did staff at the World Bank,
the IMF and elsewhere in the U.S. Government.
You will hear more next week, but I will say there are a number of
common experiences among the teams that visited countries. First, we
were received at the highest levels in every country, the president
and prime minister in virtually every case. Secondly, the countries
were uniformly proud of being recognized for their achievements.
Third, they were very enthusiastic about the concept of country
ownership, particularly after they understood the flexibility being
offered to them to set the strategic directions of their proposal.
I’ll give you a couple of examples of the impact that we had. A
senior official in Armenia stated that Armenia’s inclusion in the
program had made the country much more focused on matters of
governing, governance, democracy, the rule of law and human rights.
Another official said that because of the consultative process
officials better understood the urgency of problems in rural areas
and that their proposals had been affected by these consultations.
That’s exactly what we’re aiming for through the consultative
process. The State Secretary for the Ministry of Foreign Affairs in
Mongolia said Mongolia’s selection as an MCC-eligible country had
paved the way for a new form of relations between Mongolia and the
United States. And the Prime Minister of Cape Verde stated that the
selection of Cape Verde for the MCA was the third most significant
achievement for the country, behind its independence from Portugal in
1975 and the democratic transition in 1991. That’s fairly — in terms
of priority, what can I say? He said it all.
We are clearly now moving into a new phase of MCC operations. The
timing of initial proposal submission for each country will be
different because the specifics of proposal development are unique to
each country. To predict a timeline going forward is difficult at
this time in terms of when we’ll complete the first compacts. It is
clear as we’ve encouraged countries to take time to get their
proposals right — actually, there’s no question that our visits
probably slowed down the submission process, but for good reasons.
First, I think these countries recognize their flexibility under the
program. They wanted to stop, take stock and rethink about how they
could really use this new resource. And secondly, the consultative
process.
Other activities we’ve been quite involved in have been the compact
evaluation process, preparing it and getting ready for receipt of the
first compact proposals; secondly, detailed planning for the
implementation of the threshold program, working together with AID;
and then preparing for really the agenda of this Board meeting, which
is the candidate — beginning the candidate country selection process
for 2005.
We’ve also spent a lot of time on outreach. In terms of outreach,
we’ve spent a considerable amount of time on Capitol Hill meeting
with the members and their staff in an effort to keep interested
members up to date on MCC activities. I have testified before the
HIRC and House Appropriations Foreign Operations Subcommittee in
preparation for their deliberations. As you know, the House did pass
an appropriation bill that included $1.25 billion for ’05. We are
working to get it back — the amount up to the President’s original
request of $2.5 billion, but we do appreciate the leadership and
support of Chairman Kolbe and the bipartisan support that MCC enjoys.
We continue actively to participate in a number of outreach efforts
with NGOs and business groups and to seek opportunities for these
discussions. Developing awareness of MCC with international donors
has also been a priority. We should mention Andrew Natsios invited me
to participate in a meeting of development ministers that he was
hosting following the G-8. This meeting provided an excellent
opportunity for us to meet with the leadership of the donor community
and to introduce them to MCC and what MCC is trying to do. And I do
appreciate Andrew’s efforts to include MCC in this important meeting.
And as I mentioned previously, we are holding another public outreach
meeting next week.
In the midst of all this, it’s sometimes difficult to forget we’re
still a startup. If we can find the time, we will celebrate our
six-month birthday at the end of this week. And from an
administrative perspective, we continue to build the infrastructure
to support the implementation of MCC, including things like phones,
security systems, temporary office construction and ultimately
finding a permanent headquarters.
In terms of staffing, we’ve gone from a team of roughly eight people
at the end of January to a little over 40 today, and we continue to
build out the team. We have also continued to put in place financial
and administrative procedures. The administrative staff visited
Denver to further develop financial management and budgeting systems
with our vendor, the National Business Center at the Department of
the Interior. And, actually, we were joined on this trip by a
representative of the Inspector Generals Office.
As I mention the Inspector General, I should say in terms of
oversight, we have had extensive discussions with Hill staff, the GAO
and the Inspector General staff. We recognize the need for this
transparency and see as important strategically in terms of building
confidence of what we are about. As a startup particularly and
without demonstrable results in terms of results of our compacts for
a couple years, it’s very important that everyone have full
confidence in what we are doing and how we are doing it.
In short, I would like to say it’s been a quite busy two and a half
months since our last meeting. We’ve made considerable progress and
still have a lot to do. We look forward to receiving the proposals
from MCC countries, working to the selection of the ’05 countries and
ultimately moving closer to our goal of reducing poverty through
growth in some of the poorest countries of the world.
Thank you, Mr. Secretary.
SECRETARY POWELL: Thank you very much, Paul, and my congratulations
to you and the members of the MCC staff for the great work that you
have been doing in recent months. I always have to remind audiences
that I speak to about the Millennium Challenge Corporation and the
Account, that this has gone from a line in the President’s State of
the Union Address in January of last year in less than 18 months —
quite a few weeks less than 18 months — to a complete program, the
chartering of a corporation, the development of a board, the creation
of a staff, pushing the appropriation through the Congress, all that
is required to set up a new and rather unique organization that is
out of government but also connected to the government and enjoying
one of the President’s highest priorities. And by governmental
standards, this is a pretty rapid rate of progress and reflects a lot
of hard work on the part of Paul, Al Larson before Paul, and so many
others, and I appreciate that work.
I might just add one other word about the Millennium Challenge
Corporation. The 16 nations that were selected have all been very,
very pleased with their selection and I received all kinds of nice
letters and phone calls and visitors. And they come in and they give
me all their promises of what they’re going to do, and I said that’s
fine because we’re entering into a compact, a contract, and if you
want this funding and if you want it to continue, and you want it to
be multiyear, if you want us to stick with you, you’ve got to get
better every year with respect to these basic tests of democracy and
openness and economic freedom and end of corruption and the rule of
law. You’ve got to get better.
Of greater interest, however, are the delegations and letters and
phone calls I received from the countries that were not selected but
who are potential candidates. And those calls are of a slightly
different nature, or when they sit in my office and they look across
at me and they say, “What did we do wrong or what is it we have to do
right to get into this game?” And it’s very simple and we lay it out
for them. And they say if you do these things, then you will enhance
your prospects of being selected. And we’re going to get more money
in ’05 and we’re going to get even more money in ’06. So this is the
most significant development program since the Marshall Plan, and you
can be a recipient, you can work out a compact with us, but you’ve
got to do the right things.
The other point I would make is that this is all being done not at
the expense of our normal development assistance programs; in fact,
if you look at the record of the Administration over the last three
and a half years, there has been growth in AID spending and other
kinds of development assistance spending, and on top of that you have
this unique Millennium Challenge approach to development assistance.
And not development assistance for the purpose of keeping people on
the dole forever, but for the purpose of creating conditions in those
countries so they will start to attract investment and trade —
non-aid. It’s not for the purpose of giving them aid forever. This is
the purpose of putting them on a solid footing so that they will
attract investment and trade and get off aid, and we can use the
Millennium Challenge Account money in future years for other
countries that have met the test.
We will be talking about threshold funding. There are a number of
countries that were getting closer and they may need a little walking
around — no, I won’t call it that. (Laughter.) They need a little
help. And that’s what the threshold program is for, to give them a
little help and bring them along, make sure they understand what’s
going to be required of them, make sure they understand the demanding
nature of the tests that they will be asked to take and pass.
So I must say that, at least from my personal perspective as Chairman
of this Corporation, as well as Secretary of State, I can say that
I’m very pleased and I know the President is very pleased at the
progress that we have seen so far, but it is nothing compared to the
progress that we hope to see in the future.
With that, I would now like to move to close the open portion of the
meeting, not to cut off dialogue and debate because you’ll have that
opportunity with Paul and the staff next week, but we have to discuss
a few matters such as the ’05 country selection process, which has to
be closed because of the confidential nature of discussions and use
of classified information, and we also have to discuss some internal
personnel matters.
Members of the Board, in your Board books at Tab 2 is a resolution to
approve the closing of the meeting at this time. If there are no
questions or comments about the resolution, do I have a motion to
adopt the resolution at Tab 2?
A PARTICIPANT: So moved.
SECRETARY POWELL: Second, please?
A PARTICIPANT: Second.
SECRETARY POWELL: All in favor?
(Chorus of ayes.)
SECRETARY POWELL: Thank you very much. The resolution is adopted and
the open session of the meeting is adjourned. Please join me all
upstairs, members